India's non-banking financial companies are continuing to grapple with a funding squeeze and higher borrowing costs after a large domestic mutual fund said it would mark down the value of debt investments in NBFCs under the Anil Dhirubhai Ambani Group following a rating downgrade of the debt instruments. "The yields on AAA rated NBFCs have climbed 10-15 basis points in the past two trading sessions and there are no bids for lower-rated ones," said a domestic bond trader. Highlighting the squeeze on the so-called shadow banks, the trader said Sundaram Finance failed to find buyers last Thursday for two-year bond issues at 8.5%, after it sold bonds of the same tenor at 8.4% the previous week. "Yields have selectively gone up for some NBFCs," said a DCM banker.
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